Halina von dem Hagen sees risk everywhere. But her many years of insurance experience have told her the best way to meet it is not through avoidance, but structure. Sarfraz Thind reports
"Risk is everywhere," says Halina von dem Hagen, chief risk officer (CRO) of Manulife and winner of this year's InsuranceERM award for Americas CRO of the year.
But her many years of insurance experience have told her the best way to meet it is not through avoidance, but structure.
Risk is something that von dem Hagen has gotten closer to since she was appointed to the CRO role for Manulife in June last year, but it is not new to her.
Prior to the CRO role, she worked as the company's global treasurer and head of capital management, having joined the insurer from Royal Bank of Canada (RBC) in 2007. In the RBC role, she oversaw the capital position of the company's global operations, ensuring prudent capital management at a group level and for all its operating jurisdictions, as well as closely monitoring financial risk.
"We always operate in a reality of stress testing and ask how much capital and cushion we need if something happens, so we were very closely aligned with risk. When I came to this role, I felt very well prepared on the financial risk and resiliency side."
"When I came to this role, I felt very well prepared on the financial risk and resiliency side"
Since being appointed CRO her universe has expanded into non-financial risks. Financial resilience remains critical – the work is about the strength of the balance sheet and financials – but the additional aspect of operational resilience has come to the fore.
Nowhere more has that been seen than in the growing importance of technology. This includes cyber security, recovering from failure, but also "how quickly can we function even if we are facing outage from a third-party provider". And cyber attack is an ever-more prominent consideration, given the growth of bad actors trying to subvert businesses.
"As technology is developing it is available for good, but also for bad," says von dem Hagen. "Our own capabilities have to be ahead of this, and I don't see this pausing in the near-term."
"The risk of being left behind is as important as the risk of working and adopting AI"
Then there is artificial intelligence (AI). The newness of the subject, and its seemingly unlimited potential, comes with risk. The risks are not just confined to using the technology, but ignoring it too.
"The world is moving," says von dem Hagen. "The risk of being left behind is as important as the risk of working and adopting the technology."
Manulife, she says, cannot afford to fall behind on technology given the digital advances across the world and how peers are forging ahead with new technologies which are shifting and moving the expectations of customers. The company has been hiring the expertise it needs in AI.
Technology capabilities, model vetting, market intelligence gathering, data analytics all goes into it, as well as operating within the guardrails set by prudent risk management.
Volatility
The other key theme on her plate these days is volatility.
"Volatile is how I'd describe our world currently," she says simply.
That stems from the huge number of macro uncertainties that have arisen the past years. Rising interest rates have pushed the risk on assets, for example, and that forms another crucial part of her purview. Commercial real estate is one asset she cites where valuations have come under pressure.
"The value of stress tests is critical"
The volatility of events has also become more prominent given the growing interconnectedness of the world and the speed with which events and information transmit from one jurisdiction and market to another.
So how to deal with this? For Manulife's CRO, it is all about stressing.
"The value of stress tests for me is critical," she says. "It never plays out the exact way shown in stress tests, but it creates pathways in your brain to know what to think about. Playing different scenarios in this virtual reality ahead of time is very useful in identifying question marks, and actions to take proactively if something happens."
The future of insurance
Despite the risks, von dem Hagen says the future is good for her company, which is seeing a continued steady demand for its insurance products. Dealing with future growth requires a focus on the digitisation agenda.
"As an industry we were always deemed as very traditional, not as fast moving, but the world around us is fast moving," she says.
"The competition has truly intensified in this sphere"
"The competition has truly intensified in this sphere. How people want to engage with us – in underwriting, straight-through-processing, claims payments – all these increased expectations on us to become much more digital create opportunities to modernise ways in which we operate and serve our customers."
It is a trend already in place and one which will continue to intensify.
There is also a growing demand for protection products in regions like Asia with its growth of middle class wealth. Manulife is also big on behavioural insurance, another shift in the world to what used to be.
"Engaging with clients and being invested in the long-term health of clients is something we will be concerned with."
The macro trends are something that von dem Hagen could certainly be said to be very familiar with. Indeed, she was selected in 2019 to the Insurance Policy Advisory Committee of the US Federal Reserve Board where she served for two consecutive terms till 2023, lending it her weighty knowledge on the business of insurance risk.
Coming into the CRO role, von dem Hagen says she loves the scope of the work and its broadness and complexity, but is also inspired by "connectivity points," across the enterprise.
She cites the term "constructive tension": the balancing act for a risk function between safeguarding and enabling through businesses solutions that are acceptable from a risk perspective, and at the same time helpful to move business forward in a sustainable way.
It is a new world for insurers. Von dem Hagen looks about as qualified as anyone in the business to help embrace it.
Like Aristotle and other Greek philosophers, von dem Hagen is a serious walker, hiking 10 to 12km a day, which she says helps to clear the mind and offer fresh perspectives.
